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Using Workforce Analytics to Predict Employee Turnover

The insights provided by predictive workforce analytics can help CIOs retain essential IT staff when competition for talent is stiff.

When valued IT professionals decide to look for a new job, they often leave clues indicating their desire to switch employers. They may use up vacation time. They may cash out stock options. They may put in fewer hours or otherwise disengage from their work.

Despite those signs, managers are often shocked when their top performers submit resignation letters. If only they could have seen the writing on the wall.

Predictive workforce analytics software can help CIOs reduce voluntary turnover by identifying employees in critical roles who may be at high risk for leaving. These applications incorporate a variety of data, including an individual’s salary, the size and date of their last raise, the results of their most recent performance review, their tenure, the amount of vacation time they’ve taken in the last 12 months, and the length of their commute. From these attributes, predictive workforce analytics programs generate a risk score for each employee, showing their likelihood of leaving during the next six to 12 months. They also highlight the top factors influencing employees’ interest in leaving.

The visibility provided by predictive workforce analytics programs can help CIOs retain essential employees and fend off competitors trying to poach them when competition for IT talent is intense, despite a national unemployment rate that remains relatively high.

“Predictive analytics give executives insight into who is most likely to resign, along with reasons they’re at higher risk,” says John Houston, a principal in Deloitte Consulting LLP’s Actuarial, Risk and Advanced Analytics practice. “With these insights, executives can take targeted actions designed to retain specific employees, thereby focusing their limited resources on the individuals who are most at risk and whom they most want to keep.”

Strong IT Employment Presages Turnover

Overall job growth in the U.S. may be tepid, but it’s been steady in IT. Until IT employment dipped slightly in September 2012, the workforce segments most commonly associated with IT jobs—including management/technical consulting services and computer systems design and related services—had experienced strong growth for more than two years, according to Foote Partners LLC. An analysis conducted by Foote Partners of Bureau of Labor Statistics data shows that between October 2010 and September 2012, those two segments added 252,000 jobs to the U.S. economy.

The fact that there are more jobs means IT professionals who sat tight with their employers during the recession now have more chances to move. A survey of 246 IT professionals conducted on behalf of IT staffing provider Technisource reveals that they are aware of the opportunities that the growing IT job market presents to them: 42 percent say they’re confident in their ability to find a new job.

“If you’re a CIO responsible for 1,000 technology professionals inside a growing company and you think you’re going to need 1,200 next year, it’s much easier to keep 900 of the thousand and add 300 than to keep 700 and have to add 500,” says Houston. “Most organizations admit to losing more good people than they’d like.”

Not only is it easier to retain highly skilled employees, it’s cheaper, too.

“For most large companies, turnover is a $100 million problem, if you look at lost productivity, lost intellectual property or institutional knowledge, the cost to recruit and replace talent, and the time it takes new employees to get up to speed,” adds Houston.

Rob Eidson, a specialist leader with Deloitte Consulting LLP, says another factor to consider in the price of turnover is its impact on projects. Having previously worked in the high-tech industry, he’s seen the loss of critical project personnel cost tech companies millions of dollars in scheduling delays.

“At one company, it cost them hundreds of thousands of dollars to replace one employee who left mid-project and millions in terms of delaying the project because the company didn’t give the employee a $10,000 raise.”

Shouldn’t Turnover Be Obvious?

In today’s distributed, virtual companies, many managers lack the face-to-face contact with direct reports that can indicate when employees are engaged and when they’re not.

“Without predictive analytics, organizations only have their anecdotal knowledge to rely on,” says John Fiore, a principal with Deloitte Consulting LLP. “Anecdotal knowledge lags too far behind the day-to-day reality of business. If organizations use analytics, leaders can see what’s happening, and they know what needs to be done to retain valued people, and more importantly, when to implement retention strategies.”

About Deloitte Insights

Deloitte Insights for CIOs couples broad business insights with deep technical knowledge to help executives drive business and technology strategy, support business transformation, and enhance growth and productivity. Through fact-based research, technology perspectives and analyses, case studies and more, Deloitte Insights for CIOs informs the essential conversations in global, technology-led organizations. Learn more.

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